Income Tax Appeals and Revision: Sections 356 to 378

An assessee aggrieved by an order of the Assessing Officer has a ladder of remedies: a first appeal, a second appeal to the Tribunal, and appeals on questions of law to the High Court and the Supreme Court. Separately, senior officers can revise orders, either to protect the Revenue or to give relief to the assessee. Sections 356 to 378 of the Income-tax Act, 2025 replace sections 246 to 264 of the 1961 Act. This note covers the appellate ladder and revision.

1. The Appellate Ladder

Figure 1: From the Assessing Officer to the Supreme Court

• First appeal, ss.356 to 360. Appealable orders go to the Joint Commissioner (Appeals) or Commissioner (Appeals), who may confirm, reduce, enhance or annul the assessment after hearing the assessee; the appeal must be filed within the prescribed period (s.358)
• Tribunal, ss.361 to 364. Either the assessee or the department may appeal to the Income Tax Appellate Tribunal, the final fact finding authority, which may pass such orders as it thinks fit after hearing both sides.
• High Court, s.365 (old s.260A). An appeal lies from the Tribunal's order only if the High Court is satisfied that the case involves a substantial question of law; it is heard by a bench of at least two judges (s.366)
• Supreme Court, s.367 (old s.261). An appeal lies from the High Court's judgment in a case it certifies as fit for appeal, in addition to special leave under Article 136.
• Tax payable, s.369. Tax remains payable despite an appeal, unless recovery is stayed.

2. Revision

Figure 2: Sections 377 and 378

• Section 377 (old s.263). The Principal Commissioner or Commissioner may call for the record and, if he considers an order erroneous in so far as it is prejudicial to the interests of the Revenue, pass an order enhancing, modifying or cancelling the assessment, or directing a fresh assessment, after giving the assessee an opportunity of being heard.
• Section 378 (old s.264). He may also revise any other order, on his own motion or on the assessee's application, but may not pass an order prejudicial to the assessee.
• Malabar Industrial Co. v CIT (2000). Both conditions must be satisfied for revision under the Revenue's power: the order must be erroneous and prejudicial to the Revenue. Where the Assessing Officer has adopted one of two possible views, the order cannot be treated as erroneous merely because the Commissioner prefers the other.

Figure 3: The leading case on revision

3. Frequently Asked Questions

On what grounds does an appeal lie to the High Court in income tax matters?

Only where the High Court is satisfied that the case involves a substantial question of law, under s.365 of the 2025 Act (old s.260A). Findings of fact by the Tribunal are ordinarily final.

Can the Commissioner revise an order merely because he disagrees with the Assessing Officer's view?

No. Under Malabar Industrial Co. (2000), where the Assessing Officer has taken one of two possible views, the order is not erroneous merely because the Commissioner prefers the other view.

4. Related Topics

• Topic 20: Return of Income and Assessment. The orders appealed against.
• Topic 21: Reassessment. Challenges to reopening.
• Topic 25: Penalties and Prosecution. Appeals against penalty.